4,5,7-Trichloro-3-(2-chloroethyl)-2-methylbenzo[h][1,6]naphthyridine 1 was selectively converted to 5-iminoether 5 by the reaction with sodium alkoxy in corresponding alcohol and to 2-methylbenzo[h][1,6]naphthyridin-5(6H)-one 2 by acetic acid reflux. The reaction selectively occurs at C5-position of the benzo[h][1,6]naphthyridine. Further, 2-methylbenzo[h][1,6] naphthayridin-5(6H)-one 2 furnish O and N alkylation products 3 and 4 with bromoethylacetate respectively. The reaction of 2 with bromoacetamide yield O-acetanilide i.e. 2-(4-chloro-12-methyl-16,17-dihydro-15-thia-6,11-diaza-cyclopenta[a]phenanthren-7-ylsulfanyl)-N-phenyl acetamide 6 in major amount.